Money Matters: Teach Your Children Well

Recent studies have shown there are long-term benefits for children who learn about saving money at an early age. Photo: American Ratings Corporation (2016)

When my kids were little, my husband and I wanted to make sure they started learning how to manage money. Their allowances and gift money were divided into three categories: saving, spending and giving. It was a good exercise to ask them to think about how to allocate the funds on a regular basis (on a small scale, of course).

It turns out that a recent study underscores the importance of teaching your children about savings early in life. Researchers at the University of Kansas analyzed data from a large study of families dating back to 1968. They found that teens who had savings accounts did maintain them and accumulated more overall savings than their peers who never had accounts. They also invested in other financial products to diversify their portfolios. This is good news for banks that are interested in attracting future customers.

Another interesting finding is that the children from low- and moderate-income families who saved money for college were much more likely to go to college and complete their studies, even if they had saved less than $500. A second study from Washington University in St. Louis found that kids whose parents opened savings accounts in their names were six times more likely to attend college than those without accounts.

So, the bottom line is that it’s never too early to get your kids hooked on saving money. You can get started by finding a good bank that has no minimums and no fees for children. Encourage relatives to give cash gifts and have them ask how the money will be invested. It’s fun to visit a bank in person to make regular deposits—kids love seeing their balances increase. One financial education website even suggests asking your bank for a tour of the vault!

Here are a few websites with ideas on how to teach kids of all ages about saving money:

It’s My Life
Money Management for Kids
The Mint